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Project Management
Principles applied to the
Claims Process
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Overview
Traditional claims approaches
Discussion of factors leading to change in approach
Outline of Project Management Principles
Applying Project Management Principles to a claim
Summary
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Traditional approaches
Loss occurs.
Notification to Insurers
Adjuster attends quickly – likely with engineering experts
Adjuster requests information to establish cause and value of initial claim estimate to provide
an initial reserve to Insurers.
Adjuster may attend during repair period to view progress
Adjuster will often establish his own As-Built and Rebuild costs independently of the Insured.
Repairs complete - Plant back running
Adjuster may attend to view completed repairs and validate scope
Final Claim submitted
Coverage and cost issues negotiated and eventually claim is settled.
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Common Issues
Varying and ultimately unrealized expectations on both sides
Planning
Communication
Poor documentation
Difficulty in substantiating claim
No appreciation for required detailed validation of the claim
Uncertainty over what has been accepted by Adjuster
Poor reconciliation between claimed costs and settlement proposals
Extended Claims duration
Many key parties involved in repair move on while claim process continues
Adversarial relations
Misunderstandings result in frustration
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Why done this way?
Every situation is unique
Claim process is unpredictable
Insurance is just done that way
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Results
Claims remain unpredictable
People involved in claims have poor reputation
Unnecessarily contentious
Impacts across organization
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Why change
Recognition that the claim process impacts more than the RM/Insurance
group
A recognition of the value of project management principles within
companies.
Stricter governance – need for management controls and accountability
Leaner organizations means focus is on:-
Being right sized for day-to-day business
Less ability to handle surge jobs
Impact to public companies
Impact on cash flow
The need for a better mousetrap.
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Fundamentals of Project Management
If you fail to plan you are planning to fail.
If project content is allowed to change freely, the rate of
change will exceed the rate of progress.
If you don’t define the goalposts, how do you know when you
score
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Characteristics of Successful Projects
Clear Objectives
Good Project Plan
Communication
Controlled Scope
Stakeholder Support
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Project Planning
Project Charter
Project Execution Plan (PEP)
Task definition
Responsibility matrix
Calendar of activities
Budget
Risk Management Strategy
Execute Plan
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Project Charter/PEP
Project Charter
Define the scope of the project
May be defined by:
corporate role (JV operator?)
Size or type of loss
Project Execution Plan
Define how you want to reach your objectives
Aggressive/cooperative
Involvement/Control of legal counsel
Use of consultants
Speed or Amount of Settlement
Basis of settlement
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Define Tasks
Detail the deliverables and the work required to get them
Driven off scope of work but more detailed
Answer –
Why is this a claim?
What is affected?
What aspects of work being done are insured/not insured?
What was done about it?
What did/will it cost?
How does the money get recovered?
Know what documentation is needed to support the answers
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Responsibility Matrix
Identify the resources required to fulfill the needs of the
Tasks identified
Multi-stream response
Field (physical assets)
Field/Corporate (production/sales impacts)
Corporate (finance impacts)
Establish Roles and Accountability matrix
Lines of communication , reporting and responsibility
Document Management
Stewardship
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Develop a timeline
Take the tasks and develop a logical sequence
Define cause
Define scope of damage/repairs
Identify and define duration for insured scope and uninsured scope.
Calculate the anticipated time lag between repair being complete
and progression of the claim process .
Add in outside factors
Interim payments – what process and trigger points?
Extended duration/deferred or non-essential work
Claim closeout process
Project a target closure date
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Schedule Example
0 50 100 150 200 250 300 350 400
Incident
Conduct Cause and Origin
Cause and Origin (Prove Trigger)
Develop Scope of Damage
Scope of Damage Complete
Develop repair plan
Develop repair estimate
Demolition
Demolition Complete
Construction
Construction complete
Start-up
Begin collecting invoices
Receive last invoice
Collect proof of payment
Submit invoices to adjuster
Invoices in for review
Negotiate payment
Adjuster recommends Payment
Process payment
Payment received proof signed
Develop model for business loss
Track production impacts
provide business model for review
Review business model
Agree BI loss
Adjuster recommends Payment (BI)
Process payment (BI)
Payment received and proof signed
Claim Closed
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Risk Management
Will not anticipate all problems
Gives tool to bring in management help
Manage expectations both internally and externally
Manage resources internally and externally
Requires revisiting plan often
Revise as required
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Execute Plan
Execute the prepared plan in relation to the insurance claim
scope
Periodically revisit and revise as project proceeds
Reporting progress
Managing expectations
Develop and manage relationships
QA/QC
Close out / lessons learned
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Benefits of Project Management
Approach
Defined goalposts – Defined completion
Clear communication of expectations and accomplishments
Internally and externally
Reduced misunderstandings
Less confrontational
More efficient resolution
Less time revisiting ideas and needs
More rapid conclusion of claim
Better auditability and justification of claim amounts
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Thank you
Lloyd Kortbeek, P.Eng, CIP
Lloyd is the president and founder of E2I2 Consulting Inc, an
engineering firm specialized in dealing with industrial claims.
His firm provides investigation services related to cause and
origin, claim support services related to the preparation and
evaluation of claims, insurance claims in particular, and input and
evaluation related to optimizing operation and maintenance
methods.
Mike Roper, CIP
Mike is the president of Energy Insurance Consultants/EIC Claim
Management. The company specializes in supporting clients in
the management of their Property, Business Interruption, OEE,
Liability and Pollution claims as well as pre-loss policy wording
review and theoretical claim scenario analysis.
